Base pay with profit sharing?

C

Cameron

Location
NJ
Are any owners out there offering this to their top guys to keep their top employees motovated and keep them financially happy and have them feel like they are more a part of the company.

Also have any of you guys signed contracts for a period of so many years with terms laid out. PM if you like as I'm sure this subject could be a little sensitive.
 
Something I've always tossed around but think that human nature being what it is can take this to the lowest common demoninator, i.e., profit, not safety.

Be sure to figure out how this will take into account all elements and when you will calculate the payouts. How will you monitor it so you can give feedback to make adjustments to performance.
 
From my experience keeping top employees motivated and financially happy is only possible when they are challenged AND can see the fruits of their labor. I have not found a working model for this in tree work yet. Most of my employees were too short sighted for profit sharing to make a difference in their day to day activity. I tried paying them commission, which helped productivity, but quality suffered. In the end I fired 4 crews and run everything myself with two hourly employees.

3M has a unique business culture that encourages employees to come up with new ideas and funds them almost like starting their own business. An employee has the opportunity to grow to their full potential within the company.

I gave up trying to keep top guys for now, because I am not willing or able to fund their growth into another crew or compatible business. Profit sharing seems to be a good direction, but I like to see how I am doing on a weekly basis. I would try to make the profit sharing more personal and more often.

Research EVA (economic value added) http://en.wikipedia.org/wiki/Economic_Value_Added

If you can allocate specific equipment and expenses for your top people to manage and reward them accordingly, I think you will have a great place to learn and grow. Give them a place to grow, reward their growth and they will stay.
 
Same thing I've witnessed with commission incentives. 3M has the size and ability to capitalize on the kind of R&D you refer to. Plus it is in the business of bringing new products to market unlike us.

Given the normal life cycle of an employee in a small company it would make sense to have the profit sharing monitored on a frequent basis to ensure expenses are also being managed and not just sales and productivity.
 
It is definitely a struggle! We have a pretty informal incentive. Take care, you get paid. It is in the form of bonuses when the bank account gets well positive. It is a bit informal, keeps em guessing. Most of the folks that have worked for me for a while know that if we profit, they will. Big bonuses at Christmas are pretty awesome for both parties. Since we are a corporate entity we need to keep the corporate income down for the double taxation issue. Give them the cash!!! If you have given significantly, even once, they really never forget. A 7k bonus to a guy that makes $800 a week is not forgotten. I am not a fan of a structured situation as much because then legally (I think) everything needs to be open.
 
7k bonus!!!
smilie_schreck.gif
May I send you a resume sir? This year, for a Christmas bonus, I got laid off for two weeks.
 
For a guy that produces that is nothing compared to what he does for you. SHARE!!!

Most significant problem that I face is getting the experienced guys (that I love like family) to continue their education. Despite paying for just about anything for them, I can't get them to budge. They won't compete in comps. They won't put in the effort to be certified climbers. Each certification comes with a raise. I offered up $5 an hour for the regional climbing champion for the time that they were. Personally, I would at least give it a shot especially because I am willing to pay for the day of networking. For a guy that has been with me for 12 years, I expect him to represent :).

One thing that I do that keeps them (though not motivated) is give them a bunch of benefits. Insurance for them and their family, holidays, 3 weeks vacation (after 5 years), personal and sick time. If they actually read the policy manual and took advantage of everything that I offer to the max they would be the highest paid staff around and I would be broke. I don't get the lack of participation I get on the 401 when we are matching dollar for dollar. Insurance for a family guy adds $8 an hour to their wage. All totally worth it not to have to re-train. I had to let a guy take a break from my employment this winter because he gave me a bunch of grief when I took the gas card because they were abusing the privilege - despite several friendly warnings. I couldn't take the complete lack of humility on their part.

I would think I would be rolling in the quality help. I think those with experience don't like my method of tree care. Ya know - safe. Quite the picky SOB. I am not reaching the right people when I am looking for help.

One thing I know - money doesn't buy happiness or better production. Never let a guy extort a raise. I have made that mistake and it wasn't nice. I started a policy last year that there will be NO raises unless your certification/professional qualification improves.
 
Wow, sounds like you've got the bases covered once they're in. It may be, as you mentioned, in the hiring process. Look at the questions you're asking in the interview. Are they uncovering what motivates, what their plans are for future professional development? What do they value most in an employer? Review your hiring process and look at the current results. Change is likely necessary to get the people you want.
 
i did a 401k as well for years ....it cost me money to administer and we matched as well....no one took advantage ....crazy free money??!! so i dissolved it. with lack of participation it didnt make sense!
 
I know that when I set the 401 up, I was being selfish. I know that employees would rarely participate (cost non-existent) BUT I certainly could take advantage and get some cash out without getting the tax hit. As I understand it, the parameters of a 401 are pretty broad. A 25% savings is matched??? You would have to be crazy or stupid to leave that money on the table.
 
i agree!! there were some admin costs and testing for compliance...it simply made no sens for us ...i will more than likely
(as we profit more) look at year end distributions as bonuses...i need to talk more w my cpa...abouty it,but it sound like the way to go because its based on profit and you can either hand over to the Gov or distribute to your peops..
 
Not exactly,and quite franklyy i had a local company that administered the plan ,,,,the details are now a little grey becaus it was a couple of years ago. My plan actually morphed as we went along...I had a vesting schedule and everything.there are certain regulations where if the owner is the only participant the plan becomes "top heavy" and adjustments need to be made. After sevral years of this we decided it best to dissolve the plan and i rolled my $ into an IRA....I will more than likely reevaluate at the end of next season. I do have some other ideas as mentioned.
It was kind of a shame because i knew locally we were one of the few companies doing a profit sharing plan. The vesting schedule meant that the employee was only entitled to a percentage of the company match for each year of employment and at the end of 5 years was "fully vested" . Our believe was that it would encourage longevity with the employees!!! The first batch of employees took advantage and as people moved on ...others did not....FREE MONEY!!! they didnt want to have money taken out of their weekly pay!! go figure!
 
Far distant future security is an odd concept, when viewed thru my buddist like vision of the world around me.

C. Castaneda (sic) "A warrior fights each battle like it is his last, but packs a lunch like he might survive".
 
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